USDJPY KEEPS SURGING AS STRONG U.S DOLLAR

USDJPY continues its solid uptrend in the last several days because traders raise hopes for U.S economy and bet that Fed will lift its basic interest rate in the last meeting this year.

At 3:43 (GMT), the pair trades at 113.669, up 0.3% compared with the close price in the previous day since the market remains positive about the possibility of interest rate increase.

Fig USDJPY D1 chart

Factors that cover on USDJPY

From Japan

A report released by Markit on Thursday showed that flash manufacturing PMI in Japan reached 51.1 in November. Although this data indicated industry expansion, it failed to meet the expectation of 51.7 level and still lower than that in October.

In addition, Tokyo core CPI this month fell 0.4% compared to that a year ago, in line with the expectation and the data last month. National core CPI last month, excluding fresh food, also decreased 0.4% year-on-year as the same with the expectation. The indicator performing much better was SPPI in October year-on-year while it rose 0.5%, beating the forecast of 0.3% gain. Services producer price index (SPPI) in September had risen just 0.2%. Although SPPI did perform well, it was not strong enough to pull JPY higher.

On Friday, BOJ is scheduled to release core CPI, excluding food and energy, which is expected to rise 0.3%.

From U.S

The dollar is still hovering around the high level on Thursday as the market remains optimistic about U.S economy.

At 2:49 (GMT), USDX, which measures the dollar strength against other major currencies, was at 101.750 level, after reaching 102.070 yesteday.

Fig USDX D1 chart

On Wednesday, there are a lot of important indicators that the market needs to focus on. One of them is unemployment claims, which increased 251,000 last week, disappointing the expectation of 241,000. In the previous week, the number was just 233,000. Another report launched by U.S Department Commerce showed that U.S new home sales last month saw a 1.9% decline, disappointing the expectation of 0.3% rise. However, those data did not seem to have a huge effect on U.S dollar’s strength.

Some other data, by contrast, showed the positive signs of U.S economy. U.S durable goods order in October gain 4.8% from the number in the previous month, beating the expectation of 1.2% rise. Besides, the data drawing more attraction is core durable goods order, excluding transportation items. It gained 1.0% last month, much better than 0.2% expected raise.

In addition, University of Michigan released its consumer sentiment figure. In November, consumer sentiment index climbed to 93.8, higher than the data of 91.6 last month. Analysts had expected this data this month to be in line with that in October. Besides, University of Michigan inflation expectations in November were 2.4%, lower than the expectation of 2.7% in October.

The market is still looking forward for Trump’s fiscal stimulus plan as he said he would increase government spending and cut tax, which would push the economy’s growth. At 2:24 (GMT), the 10-year U.S Treasury note yield continued to gain 2.4 basis points to 2.406 percent compared to the close price on Thursday.

Besides, investors are positive about Fed hike rate in the next meeting. According to Fed’s minutes launched on Wednesday, most Fed officials said that it would be appropriate to hike interest rate “relatively soon”, which boosted the value of greenback.

The market waits to see some other U.S economy data to catch more information to forecast U.S dollar value. Goods trade balance and preliminary wholesale inventories are two of them.

Technical Analysis

Fig USDJPY D1 chart

As shown in the D1 chart, MA10 fans out from MA20, and both MA lines are still below the price line. RSI (14) crossed the 70 level and hovered in the overbought zone. Both indicators show a strong uptrend of the pair. However, the pair may see a small adjustment in the next session.

Fig USDJPY H4 chart

The pair was successful to climb over the upper of Bollinger Band on Wednesday’ session after the band squeezed. However, USDJPY is now experiencing a correction to below but still closely the upper boundary. ADX (14) is surging to nearly 73 level, showing that buyer’s pressure is now overweight seller’s.